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Registered number: SC342105
Atlantis Resources (Scotland) Limited
Directors' report and financial statements
For the year ended 31 December 2022
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Atlantis Resources (Scotland) Limited
Company Information
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Simon Matthew Hirst (appointed 27 September 2022)
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Chartered Accountants & Statutory Auditor
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Atlantis Resources (Scotland) Limited
Contents
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Directors' responsibilities statement
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Independent auditor's report
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Statement of comprehensive income
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Statement of financial position
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Statement of changes in equity
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Notes to the financial statements
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Atlantis Resources (Scotland) Limited
Directors' report
For the year ended 31 December 2022
The directors present their report and the financial statements for the year ended 31 December 2022.
The directors who served during the year were:
Andrew Luke Dagley (resigned 27 September 2022)
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Simon Matthew Hirst (appointed 27 September 2022)
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Disclosure of information to auditor
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Each of the persons who are directors at the time when this Directors' report is approved has confirmed that:
∙so far as the director is aware, there is no relevant audit information of which the Company's auditor is unaware, and
∙the director has taken all the steps that ought to have been taken as a director in order to be aware of any relevant audit information and to establish that the Company's auditor is aware of that information.
Under section 487(2) of the Companies Act 2006, Kreston Reeves LLP will be deemed to have been reappointed as auditor 28 days after these financial statements were sent to members or 28 days after the latest date prescribed for filing the accounts with the registrar, whichever is earlier.
In preparing this report, the directors have taken advantage of the small companies exemptions provided by section 415A of the Companies Act 2006.
This report was approved by the board and signed on its behalf.
Graham Matthew Reid
Director
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Page 1
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Atlantis Resources (Scotland) Limited
Directors' responsibilities statement
For the year ended 31 December 2022
The directors are responsible for preparing the Directors' report and the financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice), including Financial Reporting Standard 101 ‘Reduced Disclosure Framework’. Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and of the profit or loss of the Company for that period.
In preparing these financial statements, the directors are required to:
∙select suitable accounting policies and then apply them consistently;
∙make judgements and accounting estimates that are reasonable and prudent;
∙state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements;
∙prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and to enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company's website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements and other information included in Directors' reports may differ from legislation in other jurisdictions.
Page 2
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Atlantis Resources (Scotland) Limited
Independent auditor's report to the members of Atlantis Resources (Scotland) Limited
We have audited the financial statements of Atlantis Resources (Scotland) Limited (the 'Company') for the year ended 31 December 2022, which comprise the Statement of comprehensive income, the Statement of financial position, the Statement of changes in equity and the related notes, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 101 ‘Reduced Disclosure Framework’ (United Kingdom Generally Accepted Accounting Practice).
In our opinion the financial statements:
∙give a true and fair view of the state of the Company's affairs as at 31 December 2022 and of its loss for the year then ended;
∙have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
∙have been prepared in accordance with the requirements of the Companies Act 2006.
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the United Kingdom, including the Financial Reporting Council's Ethical Standard and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Material uncertainty related to going concern
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We draw attention to note 2.3 in the financial statements, which describes various matters impacting the SIMEC Atlantis Group, of which this Company is a subsidiary, which are significant in the assessment of going concern. These are:
a) Monetising the amount for the rental income stream arising from successful delivery of a Battery Energy Storage Solution ('BESS') project
b) Timing of completion for a second BESS project
c) Refinancing of Abundance bonds due for repayment in 2024
d) Timing and amount of the repayment of EU grant funding
As stated in note 2.3, these events or conditions, along with the other matters as set forth in note 2.3, indicate that a material uncertainty exists that may cast significant doubt on the Company's ability to continue as a going concern. Our opinion is not modified in respect of this matter.
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
Page 3
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Atlantis Resources (Scotland) Limited
Independent auditor's report to the members of Atlantis Resources (Scotland) Limited (continued)
The other information comprises the information included in the Annual Report other than the financial statements and our Auditor's report thereon. The directors are responsible for the other information contained within the Annual Report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinion on other matters prescribed by the Companies Act 2006
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In our opinion, based on the work undertaken in the course of the audit:
∙the information given in the Directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
∙the Directors' report has been prepared in accordance with applicable legal requirements.
Matters on which we are required to report by exception
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In the light of the knowledge and understanding of the Company and its environment obtained in the course of the audit, we have not identified material misstatements in the Directors' report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:
∙adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or
∙the financial statements are not in agreement with the accounting records and returns; or
∙certain disclosures of directors' remuneration specified by law are not made; or
∙we have not received all the information and explanations we require for our audit; or
∙the directors were not entitled to prepare the financial statements in accordance with the small companies regime and take advantage of the small companies' exemptions in preparing the Directors' report and from the requirement to prepare a Strategic report.
Responsibilities of directors
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As explained more fully in the Directors' responsibilities statement set out on page 2, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Company or to cease operations, or have no realistic alternative but to do so.
Page 4
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Atlantis Resources (Scotland) Limited
Independent auditor's report to the members of Atlantis Resources (Scotland) Limited (continued)
Auditor's responsibilities for the audit of the financial statements
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Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an Auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:
Capability of the audit in detecting irregularities, including fraud
Based on our understanding of the Company and the industry it operates in, and through discussion with the directors and other management (as required by auditing standards), we identified that the principal risks of non-compliance with laws and regulations related to health and safety, anti-bribery and employment law. We considered the extent to which non-compliance might have a material effect on the financial statements. We also considered those laws and regulations that have a direct impact on the preparation of the financial statements such as the Companies Act 2006 and taxation legislation.
We communicated identified laws and regulations throughout our team and remained alert to any indications of non-compliance throughout the audit. We evaluated management’s incentives and opportunities for fraudulent manipulation of the financial statements (including the risk of override of controls), and determined that the principal risks were related to posting inappropriate journal entries to manipulate profits, and management bias in accounting estimates and judgemental areas of the financial statements. Audit procedures performed by the engagement team included:
∙Discussions with management and assessment of known or suspected instances of non-compliance with laws and regulations (including health and safety) and fraud, and review of the reports made by management; and
∙Assessment of identified fraud risk factors; and
∙Identifying and assessing the design effectiveness of controls that management has in place to prevent and detect fraud; and
∙Performing analytical procedures to identify any unusual or unexpected relationships, including related party transactions, that may indicate risks of material misstatement due to fraud; and
∙Confirmation of related parties with management, and review of transactions throughout the period to identify any previously undisclosed transactions with related parties outside the normal course of business; and
∙Reading minutes of meetings of those charged with governance and reviewing correspondence with relevant tax authorities; and
∙Review of significant and unusual transactions and evaluation of the underlying financial rationale supporting the transactions; and
∙Identifying and testing journal entries, in particular any manual entries made at the year end for financial statement preparation.
Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation.
Page 5
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Atlantis Resources (Scotland) Limited
Independent auditor's report to the members of Atlantis Resources (Scotland) Limited (continued)
As part of an audit in accordance with ISAs (UK), we exercise professional judgement and maintain professional scepticism throughout the audit. We also:
∙Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
∙Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion of the effectiveness of the Company's internal control.
∙Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors.
∙Conclude on the appropriateness of the directors' use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our Auditor's report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our Auditor's report. However, future events or conditions may cause the Company to cease to continue as a going concern.
∙Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
This report is made solely to the Company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Company's members those matters we are required to state to them in an Auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company's members, as a body, for our audit work, for this report, or for the opinions we have formed.
Mark Attwood FCCA (Senior statutory auditor)
for and on behalf of
Kreston Reeves LLP
Chartered Accountants
Statutory Auditor
Canterbury
22 September 2023
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Atlantis Resources (Scotland) Limited
Statement of comprehensive income
For the year ended 31 December 2022
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Employee benefits expense
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Interest receivable and similar income
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Interest payable and similar expenses
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Loss for the financial year
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There was no other comprehensive income for 2022 (2021:£NIL).
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The notes on pages 10 to 24 form part of these financial statements.
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Page 7
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Atlantis Resources (Scotland) Limited
Registered number: SC342105
Statement of financial position
As at 31 December 2022
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Property, plant and equipment
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Trade and other receivables
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Cash and cash equivalents
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Total assets less current liabilities
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The financial statements were approved and authorised for issue by the board and were signed on its behalf by:
The notes on pages 10 to 24 form part of these financial statements.
Page 8
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Atlantis Resources (Scotland) Limited
Statement of changes in equity
For the year ended 31 December 2022
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Transfer to/from profit and loss account
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Capital contribution from parent company
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Transfer to/from profit and loss account
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Capital contribution from parent company
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The notes on pages 10 to 24 form part of these financial statements.
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Page 9
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Atlantis Resources (Scotland) Limited
Notes to the financial statements
For the year ended 31 December 2022
Atlantis Resources (Scotland) Limited (“the “Company”) is a private company limited by shares and is incorporated in Scotland with the registration number SC342105. The address of the registered office is 26 Dublin Street, Edinburgh, United Kingdom, EH3 6NN.
The principal activities of the Company comprise the provision of research support to related party companies developing tidal energy projects and the development of technology to harness tidal power.
2.Accounting policies
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Basis of preparation of financial statements
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The financial statements have been prepared under the historical cost convention unless otherwise specified within these accounting policies and in accordance with Financial Reporting Standard 101 'Reduced Disclosure Framework' and the Companies Act 2006.
These financial statements are rounded to the nearest pound, unless stated otherwise.
The preparation of financial statements in compliance with FRS 101 requires the use of certain critical accounting estimates. It also requires management to exercise judgement in applying the Company's accounting policies (see note 3).
The following principal accounting policies have been applied:
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Financial Reporting Standard 101 - reduced disclosure exemptions
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The Company has taken advantage of the following disclosure exemptions under FRS 101:
∙the requirements of paragraphs 45(b) and 46-52 of IFRS 2 Share-based payment
∙the requirements of IFRS 7 Financial Instruments: Disclosures
∙the requirements of the second sentence of paragraph 110 and paragraphs 113(a), 114, 115, 118, 119(a) to (c), 120 to 127 and 129 of IFRS 15 Revenue from Contracts with Customers
∙the requirements of paragraph 52, the second sentence of paragraph 89, and paragraphs 90, 91 and 93 of IFRS 16 Leases. The requirements of paragraph 58 of IFRS 16, provided that the disclosure of details in indebtedness relating to amounts payable after 5 years required by company law is presented separately for lease liabilities and other liabilities, and in total
∙the requirement in paragraph 38 of IAS 1 'Presentation of Financial Statements' to present comparative information in respect of:
- paragraph 79(a)(iv) of IAS 1;
- paragraph 73(e) of IAS 16 Property, Plant and Equipment;
∙the requirements of paragraphs 10(d), 10(f), 16, 38A, 38B, 38C, 38D, 40A, 40B, 40C, 40D, 111 and 134-136 of IAS 1 Presentation of Financial Statements
∙the requirements of IAS 7 Statement of Cash Flows
∙the requirements of paragraphs 30 and 31 of IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors
∙the requirements of paragraph 17 and 18A of IAS 24 Related Party Disclosures
∙the requirements in IAS 24 Related Party Disclosures to disclose related party transactions entered into between two or more members of a group, provided that any subsidiary which is a party to the transaction is wholly owned by such a member
This information is included in the consolidated financial statements of SIMEC Atlantis Energy Limited as at 31 December 2022 and these financial statements may be obtained from www.saerenewables.com.
Page 10
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Atlantis Resources (Scotland) Limited
Notes to the financial statements
For the year ended 31 December 2022
2.Accounting policies (continued)
These financial statements have been prepared on the going concern basis. The directors are required to state whether it is appropriate to adopt the going concern basis of accounting in preparing the financial statements, and to identify any material uncertainties as to the Company’s ability to continue as a going concern over a period of at least 12 months from the date of approval of the financial statements. The period of management’s going concern assessment is the period to 30 September 2024.
The Company is in a net liability position of £21.40 million as at the financial year end (including amounts of £1.87 million due to it from related companies within the group) and the Company requires parental financial support from SIMEC Atlantis Energy Limited (the “Parent”). The Parent has provided a letter of support confirming it will provide support for the period of at least 12 months from the date of approval of these financial statements.
The Directors of the Company have considered the ability of the parent to provide financial support, through directly reviewing the going concern assessment of the parent. The Directors have identified a material uncertainty in relation to the availability of ongoing financial support from the parent company that may cast significant doubt upon the Company’s ability to continue as a going concern.
Going concern assessment - parent
The Parent company financial statements for the year ended 31 December 2022 were approved by its directors on 25 July 2023 having adopted the going concern basis of preparation. After reviewing the current liquidity position, financial forecasts and stress testing of risks and based on current funding facilities and considerations noted above the Board of Directors of the parent have a reasonable expectation that the Group has sufficient resources to continue in operational existence for the foreseeable future. As a result, the parent continues to adopt the going concern basis of accounting in preparing the Group financial statements.
The Directors of the Parent company identified four material uncertainties that may cast significant doubt upon the Parent’s ability to continue as a going concern. In summary, these are:
a) Monetising the amount for the rental income stream arising from successful delivery of a Battery Energy Storage Solution ('BESS') project
b) Timing of completion for a second BESS project
c) Refinancing of the Abundance bonds due for repayment in 2024
d) Timing of the repayment of EU grant funding
The Directors of the Parent company have also identified various actions which could be implemented, and other factors which may serve to mitigate against these uncertainties.
Please refer to the full Annual Report of SIMEC Atlantis Energy Limited (which can be found at www.saerenewables.com) for details of the material uncertainties identified.
Material uncertainty in relation to going concern of the Company
Taking the above going concern assessment of the Parent into consideration, the Directors of the Company have identified a material uncertainty in relation to the availability of ongoing financial support from the Parent company that may cast significant doubt upon the Company’s ability to continue as a going concern.
Nevertheless, the Directors have taken confidence from the Parent company’s expectation for future success, which includes possible new sources of revenue, that may mitigate against the existence of material uncertainties about the Parent company’s ability to continue as a going concern.
Page 11
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Atlantis Resources (Scotland) Limited
Notes to the financial statements
For the year ended 31 December 2022
2.Accounting policies (continued)
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Going concern (continued)
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Despite the material uncertainty, on the basis of the Parent’s going concern assessment, stress testing and consideration of the mitigations available, the Board of Directors of the Company have a reasonable expectation that the parent has sufficient resources to provide ongoing financial support for the foreseeable future. As a result, the Board of Directors of the Company will continue to adopt the going concern basis of accounting in preparing the Company financial statements. The Company financial statements do not include the adjustments that would result if the Company were unable to continue as a going concern.
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Foreign currency translation
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Functional and presentation currency
The Company's functional and presentational currency is GBP.
Transactions and balances
Foreign currency transactions are translated into the functional currency using the spot exchange rates at the dates of the transactions.
At each period end foreign currency monetary items are translated using the closing rate. Non-monetary items measured at historical cost are translated using the exchange rate at the date of the transaction and non-monetary items measured at fair value are measured using the exchange rate when fair value was determined.
Foreign exchange gains and losses resulting from the settlement of transactions and from the translation at period-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss except when deferred in other comprehensive income as qualifying cash flow hedges.
Foreign exchange gains and losses that relate to borrowings and cash and cash equivalents are presented in the Statement of comprehensive income within 'finance income or costs'. All other foreign exchange gains and losses are presented in profit or loss within 'other operating income'.
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured. Revenue is measured as the fair value of the consideration received or receivable, excluding discounts, rebates, value added tax and other sales taxes. The following criteria must also be met before revenue is recognised:
Rendering of services
Revenue from providing services is recognised in the accounting period in which the services are rendered.
Consulting fees are recognised in profit or loss in proportion to the stage of completion of the transaction at the reporting date
Page 12
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Atlantis Resources (Scotland) Limited
Notes to the financial statements
For the year ended 31 December 2022
2.Accounting policies (continued)
The Company as a lessee
The Company assesses whether a contract is or contains a lease, at inception of a contract. The Company recognises a right-of-use asset and a corresponding lease liability with respect to all lease agreements in which it is the lessee, except for short-term leases (defined as leases with a lease term of 12 months or less) and leases of low value assets. For these leases, the Company recognises the lease payments as an operating expense on a straight-line basis over the term of the lease unless another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.
The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted by using the rate implicit in the lease. If this rate cannot be readily determined, the Company uses its incremental borrowing rate.
Lease payments included in the measurement of the lease liability comprise:
∙fixed lease payments (including in-substance fixed payments), less any lease incentives;
The lease liability is included in 'Creditors' on the Statement of financial position.
The lease liability is subsequently measured by increasing the carrying amount to reflect interest on the lease liability (using the effective interest method) and by reducing the carrying amount to reflect the lease payments made.
The Company remeasures the lease liability (and makes a corresponding adjustment to the related right-of-use asset) whenever:
∙a lease contract is modified and the lease modification is not accounted for as a separate lease, in which case the lease liability is remeasured by discounting the revised lease payments using a revised discount rate.
The Company did not make any such adjustments during the periods presented.
The right-of-use assets comprise the initial measurement of the corresponding lease liability, lease payments made at or before the commencement day and any initial direct costs. They are subsequently measured at cost less accumulated depreciation and impairment losses.
Right-of-use assets are depreciated over the shorter period of lease term and useful life of the underlying asset. If a lease transfers ownership of the underlying asset or the cost of the right-of-use asset reflects that the Company expects to exercise a purchase option, the related right-of-use asset is depreciated over the useful life of the underlying asset. The depreciation starts at the commencement date of the lease.
The right-of-use assets are included in the 'Intangible Assets', 'Tangible Fixed Assets' and 'Investment Property' lines, as applicable, in the Statement of financial position.
The Company applies IAS 36 to determine whether a right-of-use asset is impaired and accounts for any identified impairment loss as described in note 2.13.
As a practical expedient, IFRS 16 permits a lessee not to separate non-lease components, and instead account for any lease and associated non-lease components as a single arrangement. The Company has used this practical expedient.
Page 13
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Atlantis Resources (Scotland) Limited
Notes to the financial statements
For the year ended 31 December 2022
2.Accounting policies (continued)
Grants are not recognised until there is reasonable assurance that the Company will comply with the conditions attaching to them and that the grants will be received. Government grants whose primary condition is that the Company should purchase, construct or otherwise acquire non-current assets are presented as a deduction from the carrying amount of the related assets and recognised as income over the useful lives of the assets by way of a reduced depreciation charge.
Grants that are receivable as compensation for expenses or losses already incurred or for the purpose of giving immediate financial support to the Company with no future related costs are recognised in profit or loss in the period in which they become receivable.
Interest income is recognised in profit or loss using the effective interest method.
Finance costs are charged to profit or loss over the term of the debt using the effective interest method so that the amount charged is at a constant rate on the carrying amount. Issue costs are initially recognised as a reduction in the proceeds of the associated capital instrument.
Defined contribution pension plan
The Company operates a defined contribution plan for its employees. A defined contribution plan is a pension plan under which the Company pays fixed contributions into a separate entity. Once the contributions have been paid the Company has no further payment obligations.
The contributions are recognised as an expense in profit or loss when they fall due. Amounts not paid are shown in accruals as a liability in the Statement of financial position. The assets of the plan are held separately from the Company in independently administered funds.
The ultimate parent company, SIMEC Atlantis Energy Limited, issues equity-settled share-based payments to certain employees. Equity settled share-based payments are measured at fair value at the date of grant. The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the estimate of shares that will eventually vest and adjusted for the effect of non-market-based vesting conditions. A corresponding increase is recognised in equity as a capital contribution from SIMEC Atlantis Energy Limited.
Fair value is measured by use of the Black-Scholes pricing model. The expected life used in the model has been adjusted, based on management’s best estimate, for the effects of non-transferability, exercise restrictions, and behavioural considerations.
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Atlantis Resources (Scotland) Limited
Notes to the financial statements
For the year ended 31 December 2022
2.Accounting policies (continued)
Tax is recognised in profit or loss except that a charge attributable to an item of income and expense recognised as other comprehensive income or to an item recognised directly in equity is also recognised in other comprehensive income or directly in equity respectively.
The current income tax charge is calculated on the basis of tax rates and laws that have been enacted or substantively enacted by the reporting date in the countries where the Company operates and generates income.
Deferred tax balances are recognised in respect of all timing differences that have originated but not reversed by the reporting date, except that:
∙The recognition of deferred tax assets is limited to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits; and
∙Any deferred tax balances are reversed if and when all conditions for retaining associated tax allowances have been met.
Deferred tax is determined using tax rates and laws that have been enacted or substantively enacted by the reporting date.
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Property, plant and equipment
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Property, plant and equipment assets under the cost model are stated at historical cost less accumulated depreciation and any accumulated impairment losses. Historical cost includes expenditure that is directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management.
At each reporting date the Company assesses whether there is any indication of impairment. If such indication exists, the recoverable amount of the asset is determined which is the higher of its fair value less costs to sell and its value in use. An impairment loss is recognised where the carrying amount exceeds the recoverable amount.
The Company adds to the carrying amount of an item of fixed assets the cost of replacing part of such an item when that cost is incurred, if the replacement part is expected to provide incremental future benefits to the Company. The carrying amount of the replaced part is derecognised. Repairs and maintenance are charged to profit or loss during the period in which they are incurred.
Depreciation is charged so as to allocate the cost of assets less their residual value over their estimated useful lives, using the straight-line method.
Depreciation is provided on the following basis:
The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively if appropriate, or if there is an indication of a significant change since the last reporting date.
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in profit or loss.
Page 15
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Atlantis Resources (Scotland) Limited
Notes to the financial statements
For the year ended 31 December 2022
2.Accounting policies (continued)
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Cash and cash equivalents
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Cash is represented by cash in hand and deposits with financial institutions repayable without penalty on notice of not more than 24 hours. Cash equivalents are highly liquid investments that mature in no more than three months from the date of acquisition and that are readily convertible to known amounts of cash with insignificant risk of change in value.
Page 16
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Atlantis Resources (Scotland) Limited
Notes to the financial statements
For the year ended 31 December 2022
2.Accounting policies (continued)
The Company recognises financial instruments when it becomes a party to the contractual arrangements of the instrument. Financial instruments are de-recognised when they are discharged or when the contractual terms expire. The Company's accounting policies in respect of financial instruments transactions are explained below:
Financial assets and financial liabilities are initially measured at fair value.
Financial assets
All recognised financial assets are subsequently measured in their entirety at either fair value or amortised cost, depending on the classification of the financial assets.
Debt instruments at amortised cost
Debt instruments are subsequently measured at amortised cost where they are financial assets held within a business model whose objective is to hold financial assets in order to collect contractual cash flows and selling the financial assets, and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. Amortised cost is calculated using the effective interest method and represents the amount measured at initial recognition less repayments of principal plus the cumulative amortisation using the effective interest method of any difference between the initial amount and the maturity amount, adjusted for any loss allowance.
Impairment of financial assets
The Company recognises a loss allowance for expected credit losses on investments in debt instruments that are measured at amortised or at FVOCI. The amount of expected credit losses is updated at each reporting date to reflect changes in credit risk since initial recognition of the respective financial instrument.
The Company always recognises lifetime ECL for trade receivables and amounts due on contracts with customers. The expected credit losses on these financial assets are estimated based on the Company's historical credit loss experience, adjusted for factors that are specific to the debtors, general economic conditions and an assessment of both the current as well as the forecast direction of conditions at the reporting date, including time value of money where appropriate. Lifetime ECL represents the expected credit losses that will result from all possible default events over the expected life of a financial instrument.
Financial liabilities
At amortised cost
Financial liabilities which are neither contingent consideration of an acquirer in a business combination, held for trading, nor designated as at fair value through profit or loss are subsequently measured at amortised cost using the effective interest method. This is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments through the expected life of the financial liability, or where appropriate a shorter period, to the amortised cost of a financial liability.
Page 17
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Atlantis Resources (Scotland) Limited
Notes to the financial statements
For the year ended 31 December 2022
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Judgements in applying accounting policies and key sources of estimation uncertainty
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The preparation of financial statements in conformity with FRS 101 requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reporting amount of income and expenses during the year. Although these estimates are based on management’s best knowledge of the amount, event or actions, actual results ultimately may differ from those estimates.
The Company’s accounting policies make use of estimates and judgments in the following areas; carrying value of loans, payables and receivables, depreciation and taxation. These are described in more detail in the relevant accounting notes.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods. The directors do not consider there to be any significant judgments made in the application of the accounting policies.
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Government grants receivable
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Service fee from related companies
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The operating loss is stated after charging/(crediting):
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Depreciation of tangible fixed assets
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Defined contribution pension cost
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Fees payable to the Company's auditor for the audit of the Company's financial statements
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Page 18
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Atlantis Resources (Scotland) Limited
Notes to the financial statements
For the year ended 31 December 2022
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Cost of defined contribution scheme
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Included in wages and salaries are share-based payment expenses of £117,925 (2021 - £210,550) in respect of an equity-settled scheme operated by SIMEC Atlantis Energy Limited, the parent undertaking, for certain employees.
The directors are employees of other Group entities and no consideration is paid by the Company to the other entities for the services rendered by these directors.
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The average monthly number of employees, including the directors, during the year was as follows:
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Other interest receivable
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Interest payable and similar expenses
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Interest on lease liabilities
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Page 19
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Atlantis Resources (Scotland) Limited
Notes to the financial statements
For the year ended 31 December 2022
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Current tax on profits for the year
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Factors affecting tax charge for the year
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The tax assessed for the year differs from the amount computed by applying the standard rate of corporation tax in the UK of 19% (2021 - 19%). The differences are explained below:
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Loss on ordinary activities before tax
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Loss on ordinary activities multiplied by standard rate of corporation tax in the UK of 19% (2021 - 19%)
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Unrelieved tax losses carried forward
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Total tax charge for the year
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Factors that may affect future tax charges
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The main rate of corporation tax will increase on 1 April 2023 to 25%, for companies with taxable profits above £250,000. Companies with taxable profits below £50,000 will continue to pay at 19%, and marginal relief will apply between these thresholds. This change formed part of The Finance Bill 2021, which was substantively enacted on 24 May 2021, and is applicable at the reporting date.
At the end of the reporting period, the Company has unutilised tax losses of £12.8m (2021 - £12.6m) available to offset against future profits.
No deferred tax asset has been recognised due to the unpredictability of future profit streams.
Page 20
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Atlantis Resources (Scotland) Limited
Notes to the financial statements
For the year ended 31 December 2022
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Property, plant and equipment
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Right-of-use - Land and buildings
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Charge for the year on owned assets
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The net book value of owned and leased assets included as "Tangible fixed assets" in the Statement of financial position is as follows:
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Tangible fixed assets owned
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Right-of-use tangible fixed assets
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Information about right-of-use assets is summarised below:
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Depreciation charge for the year ended
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Page 21
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Atlantis Resources (Scotland) Limited
Notes to the financial statements
For the year ended 31 December 2022
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Trade and other receivables
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Amounts owed by group undertakings
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Prepayments and accrued income
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Amounts owed by group undertakings include:
i) A loan of £2,900,376 (2021 - £2,729,543) due from Marine Current Turbines Limited, which is subject to interest at 10.5% per annum and is repayable on demand. A provision for impairment in the sum of £2,900,376 (2021 - £2,729,543) has been made against these receivable balances.
ii) A loan of £438,484 (2021 - £423,029) due from SIMEC Atlantis Energy Limited, which is interest bearing at 5% per annum, unsecured and is repayable on demand. At the balance sheet date, the fair value of the loan approximates its carrying value.
iii) Other amounts due from related companies, which are non-trade in nature, unsecured, interest-free and repayable on demand. A provision for impairment in the sum of £5,917,316 (2021 - £5,118,453) has been made against these receivable balances.
The directors are of the view that the remaining receivables are recoverable.
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Cash and cash equivalents
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Amounts owed to group undertakings
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Other taxation and social security
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Accruals and deferred income
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Amounts due to related companies are unsecured, interest free and repayable on demand.
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Page 22
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Atlantis Resources (Scotland) Limited
Notes to the financial statements
For the year ended 31 December 2022
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The Company has lease contracts for land and buildings, with lease terms of 5 to 10 years.
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Lease liabilities are due as follows:
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The following amounts in respect of leases, where the Company is a lessee, have been recognised in profit or loss:
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Interest expense on lease liabilities
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Lease obligations have been discounted based on the Company’s incremental borrowing rate with a weighted average of 6% (2021 - 6%)
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Allotted, called up and fully paid
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100 (2021 - 100) Ordinary shares of £1.00 each
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The Company has one class of Ordinary shares, which carry no right to fixed income.
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Other reserves
During the financial period, the Company recognised share based payment expenses amounting to £117,924 (2021 - £210,550) arising from grants of shares options and stock awards by the ultimate holding company to an employee of the Company, resulting in a corresponding recognition of a capital contribution from the immediate holding company.
Transfer between reserves of £67,439 (2021 - £98,541) relate to lapsed share options relating to leavers of the share options scheme.
Retained earnings
This reserve comprises all current and prior period retained profits and losses after deducting any distributions made to the Company’s shareholders.
Page 23
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Atlantis Resources (Scotland) Limited
Notes to the financial statements
For the year ended 31 December 2022
The Company operates a defined contribution pension scheme. The assets of the scheme are held separately from those of the Company in an independently administered fund. The pension cost charge represents contributions payable by the Company to the fund and amounted to £114,598 (2021 - £189,814). No contributions were payable to the fund at the reporting date.
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Related party transactions
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The Company has taken the exemption available under FRS 101 regarding related party transactions entered into between two or more members of a group, provided that the subsidiaries party to the transaction are wholly owned by a member of the group. Disclosure is made of related party transactions which are not wholly owned subsidiaries within the group and therefore do not qualify for the disclosure exemption.
During the year, the Company entered into the following significant transactions with fellow group undertakings:
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MeyGen plc - service fee income and costs recharged
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The following amounts were due (to)/from fellow group undertakings at the year end:
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MeyGen Holdings Limited *
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Tidal Power Scotland Limited *
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* Full provision has been made against these amounts due from fellow group undertakings. The total expense related to these provisions was £NIL (2021 - £11,523).
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At 31 December 2022 the Company's immediate and ultimate parent company was SIMEC Atlantis Energy Limited, a company incorporated and registered in Singapore.
The largest group of undertakings for which group accounts are drawn up and of which the Company is included is the group headed by SIMEC Atlantis Energy Limited. No other group financial statements include the results of this Company. The registered office of SIMEC Atlantis Energy Limited is Level 4, 21 Merchant Road, #04-01, Singapore 058267.
Copies of the financial statements of SIMEC Atlantis Energy Limited are available to the public and may be obtained from www.saerenewables.com.
Page 24
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